to stay ahead, we go beyond - FedEx Annual Report 2012

To our shareowners

FedEx showed real grit in FY12. We committed to a strong performance, and we delivered — no small feat, given the year’s challenges. Our earnings per share increased 40 percent, and annual revenues exceeded $42 billion, a 9 percent increase, despite political gridlock in the United States, financial turmoil in Europe, a slowing Asian economy and volatile fuel prices.

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FINANCIAL HIGHLIGHTS 2012

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To stay ahead, we change the game

As the speed of global change accelerates, the difference between leaders and followers is defined by one word — agility. We not only have the ability to quickly react to changing economic conditions and customer needs, but also the agility to anticipate and effect change. FedEx is redefining our industry as we continually reshape and refine our focused networks to gain speed and efficiency. When we change the game, our customers win.

Customers are in the fast lanethanks to a dedicated FedEx Ground team that continually fine-tunes the ground network, much like a race car, to enhance speed, safety and reliability. From left: Kimberly Whigham, managing director, Vehicle Maintenance; Jeff Grimm, managing director, Linehaul Planning; Brian Neal, manager, Safety Process Management; Steve Griffin, vice president, Linehaul; Rich Sturges, senior manager, Linehaul Engineering.

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Accelerating Access

FedEx Express is the largest all-cargo airline in the world and the largest express transportation company. Our long-range Boeing 777F aircraft directly link global markets, speeding customers’ shipments door-to-door. In the last two years, we’ve improved global access by completing acquisitions in India, Mexico, Poland, France and Brazil. To accommodate evolving customer needs, the global offices of FedEx Trade Networks offer end-to-end shipping services, including air and ocean freight forwarding supported by customs brokerage.

Gaining Speed

FedEx Ground continues to delight customers by shortening transit times throughout the U.S. and Canada. Businesses can reach more locations faster than with any other ground carrier. Convenient FedEx Ground home delivery and FedEx SmartPost services support the growing consumer trend to buy online, which grew by double digits in each of the last two years. In the United States, Cyber Monday online sales rose 22 percent, to $1.25 billion last year — the largest online shopping day ever, boosting holiday shipping volumes to record levels.

Shifting Gears

FedEx Freight is the first carrier to offer less-than-truckload (LTL) shipping customers two choices: priority and economy. In an industry where most shipments are processed manually, we’re automating much of the shipping process, improving customers’ productivity and earning their loyalty. We’ve also made it much easier and faster for shippers to classify freight with Freight Central, our convenient online resource for LTL shippers. Combined with industry-leading transit times, these changes have made FedEx Freight a market leader in the U.S. LTL industry, a $31 billion market in 2011.

Innovating Solutions

FedEx Services transforms our superior technology and delivery services into shipping and business solutions for customers. Their choices are based on what’s most important to them today. That’s why our portfolio includes air and ocean freight forwarding solutions to complement our express and air cargo services. Meanwhile, at FedEx Office locations, we installed 8,000 pieces of printing equipment in the last two years. The technology can deliver a variety of signage and over-sized prints for customers ranging from big-box retailers with multiple locations to large corporations to small businesses.

To stay ahead, we do what’s right

A passion for quality drives FedEx team members worldwide. Our culture of continuous improvement embraces change and drives innovation. In turn, we enhance the lives of our customers and their communities so that our customers remain among the most satisfied and loyal in the industry. Whether it’s the transportation services we provide, the information technology we support or the sustainable solutions we implement, when we do the right thing, we earn their trust.

If knowledge is power, FedEx customers have a competitive advantage thanks to the FedEx Trade Networks team that manages My Global Trade Data. They’re dedicated to providing the quality tracking and reporting that are essential to managing international freight forwarding shipments. From left: Reneé Brown, product specialist; Paul Kirkeby, senior programmer analyst; Chauntisse Foster, senior product advisor; Alan Hunt, IT manager.

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QUALITY DRIVEN MANAGEMENT

is how we successfully respond to the pressures of today’s business environment. In a recent improvement effort, we’ve reduced lost and damaged shipments, demonstrating our commitment to service excellence and saving millions of dollars. Global teams also worked on behalf of customers to continue improving the customs clearance process. More accurate clearance documentation, technology improvements and better collaboration among global regulatory authorities give FedEx customers an edge in the marketplace.

INFORMATION

about a shipment is as important as the shipment itself. Whether it’s an overnight holiday gift or a supply chain that stretches across the globe, our customers stay in-the-know thanks to our superior technology. The new Colorado Springs Enterprise Data Center is the heart of a cutting-edge IT transformation to hybrid cloud architecture. This innovative technology enables FedEx to be more productive and efficient by accessing computer resources even as data expands at 40 percent per year. The size and scope of the implementation is one of the largest within a commercial real-time system.

SUSTAINABILITY

and innovation go hand in hand at FedEx. We call it EarthSmart — FedEx solutions for a more sustainable world. Our customers can now neutralize their carbon emissions when they ship their documents by taking advantage of our new FedEx carbon-neutral envelope shipping. FedEx Express is the first global express transportation company to offer the program to customers at no charge.

FedEx is closing in on our vehicle fleet fuel-efficiency goal — making our vehicle fleet 20 percent more fuel efficient by 2020 — years ahead of schedule. Our strategy has been to reduce the number of vehicles that we need by continually making our routes more efficient and then selecting the most efficient vehicle for the job. We’re adding 87 all-electric trucks to the fleet to bring the total to 130 in the United States, Asia and Europe. About 11,000 Sprinter vans will also be added. Each is 70 to 100 percent more fuel efficient than the truck it replaces.

We’re modernizing our aircraft fleet with Boeing 757s, 767s and 777s, which are delivering significant increases in fuel efficiency and reduced operating costs and emissions. After only six years into our 15-year plan, we have completed 69 percent of our goal to reduce aircraft emissions intensity 20 percent by 2020. Because we’re ahead of plan, our goal is to now reduce aircraft emissions intensity 30 percent by 2020.

At FedEx Office, more than 5 million pounds of paper were recycled in 2011, saving tens of thousands of trees. FedEx Office built independent paper-recycling systems into all of its North America locations, because many communities have inadequate recycling or none at all.

To stay ahead, we go beyond

When the going gets tough, FedEx shows the spirit and determination that have always set us apart. FY12 was a year of challenges marked by economic and political disruptions and lagging growth around the globe. To stay ahead, we go beyond — in the way we manage our business, deliver the quality service our customers expect and create solutions for a more sustainable world.

“I will make every FedEx experience outstanding.”

— The Purple Promise

A good or acceptable experience doesn’t cut it for us. We share a goal to deliver outstanding FedEx experiences, a commitment we call the Purple Promise. Our team members around the world add up to a powerful advantage for FedEx. One that goes beyond the ordinary to achieve the extraordinary.

When we go beyond, our customers and communities thrive. Each year we honor the best of the best of our team members with the Purple Promise Chairman’s Award. Meet three of the recipients, from left: Joe Reedy, supervisor, FedEx Custom Critical; Megan Hershberger, supervisor, FedEx Custom Critical; William Davis, customer advocate representative, FedEx TechConnect.

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When we go beyond, our customers stay ahead.

The marketplace is a world of opportunity, and our job is to put it within reach. When we connect people, communities flourish, countries prosper and the world becomes a richer place.

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Resources

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